REPUBLIC OF GHANA: SUMMARY FACTS
Ghana is a tropical country south of the Sahara Desert in West Africa, with a short 539km long coastline on the South Atlantic Ocean. The country has a land area of 239 thousand square kilometres, which places Ghana as slightly larger than the State of Victoria. The capital Accra is 5 degrees north of the Equator and lies nearly on the prime meridian (0 degrees longitude), due south of London. Thus, Accra time is eight hours behind Perth time, there being no time adjustment in summer. Accra can be reached from Perth on flights via Europe (London, Amsterdam, Zurich, Frankfurt or Rome) on any day of the week, or via Johannesburg three times a week.
The climate is tropical. The eastern coastal belt is warm and comparatively dry; the southwest corner, hot and humid; and the north, hot and dry. There are two distinct rainy seasons in the south: May-June and August-September, whereas in the north, the rainy seasons tend to merge. A dry but gentle, north-easterly wind, the Harmattan, blows in from the Sahel and the Sahara Desert in January and February. Annual rainfall in the coastal zone averages 83 centimetres (33 in.).
The coastline is mostly a low, sandy shore backed by plains and scrub and intersected by several rivers and streams, most of which are navigable only by canoe. A tropical rain forest belt, broken by heavily forested hills and many streams and rivers, extends northward from the shore, near the Cote d'Ivoire frontier. This area produces most of the country's cocoa, minerals, and timber. North of this belt, the country varies from 91 to 396 meters (300-1,300 ft.) above sea level and is covered by low bush, savanna, and grassy plains, which resemble Northern Australia in character. The man-made Lake Volta extends from the Akosombo Dam in south-eastern Ghana to the town of Yapei, 520 km (325 mi.) to the north. The lake generates electricity, provides inland transportation, and is a potentially valuable resource for irrigation and fish farming.
The population is about 19 million and is densest in the main urban areas (eg Accra, 1 million plus) and the cocoa farming areas in the south. Urban population growth rates are probably twice that of the country as a whole. English is the official national language and is widely read and spoken as education and government structures are derived from British models. Inter-ethnic strife is not a feature of the country despite a multiplicity of African language and dialects, and a diverse history. About 1.5 million Ghanaians live abroad, mainly in Europe and North America, with a total annual contribution of about 300 to 400 million US dollars into the national economy, at an informal level. A small number are resident in Australasia.
Ghana is a unitary republic within the Commonwealth, having become independent from colonial Britain on March 6th, 1957, and the first sub-Saharan African country to become a State free from a European power. Despite its turbulent history in the first decades following independence, Ghana has emerged in the 1990s as a stable, multi-party democracy. Between independence and Flight Lieutenant Jerry John Rawlings's advent to power in 1981, Ghana had two political traditions - initially the socialist policies followed by Kwame Nkrumah immediately after independence, and a laissez-faire tradition, which succeeded him. Rawlings introduced a third element - policies of broad-based development favouring rural areas, and the expansion of the private sector.
Under the terms of the 1992 Constitution (Fourth Republic), executive power is vested in the President, who is Head of State and Commander-in-Chief of the armed forces. The President is elected by universal adult suffrage for a term of four years, and appoints a Vice-President. Rawlings was re-elected President in 1996 for his second and final term. Legislative power is vested in a single chamber parliament consisting of between 160 and 200 members elected by direct adult suffrage on a first-past-the-post basis for a four-year term.
At the last elections held in December 2000, His Excellency John Agyekum Kufuor was elected President and sworn in on 7th January 2001, and his political party, the New Patriotic Party forms the government in Parliament.
Ghana's economy is based primarily on agriculture (cocoa, domestic food crops, forestry, and fishing), which accounted for 40-45% of GDP in the period 1991 to 1995, but has now declined to some 20%. The mining and manufacturing industry accounts, however, for only a fifth of GDP, with services making up the remainder.
Cocoa is Ghana's best known crop, and it accounted for between 45% and 70% of commodity exports from the 1970s to the 1990s, when increased mineral revenues led to a decline in its share of exports, to some 37%. Between January and September 1999, cocoa prices fell by 33% reaching a 5 year low in May, causing a severe revenue loss for the country.
Other major exports are gold and timber. Both the gold and timber industries were established in the 1880, with gold enjoying a major revival in the 1990s. Gold production is running at about 2.4 million ounces per annum. However, gold also suffered in 1999 as prices hit 20 year lows, but has since recovered to better levels. Ghana also has sizeable deposits of diamonds, bauxite and manganese. Mineral exports account for almost half of Ghana's foreign exchange earnings.
The government's privatisation programme, which envisages the outright sale or reduction of equity in some 300 government-owned corporations and enterprises, received an important boost in 1994 with the sale of 25 percent of its equity in the Ashanti Goldfields Corporation, Ghana's largest gold mining company (1.24 million ounces per annum from 4 mines), and the 9th largest in the World. Ghana has now sold more than 180 of its state-owned enterprises to private investors and, since the passing of the Investment Act in 1994, has recorded 250 new foreign investments, 70% of which are joint ventures involving Ghanaians.
Ghana is one of the few countries in western Africa to offer real economic promise, and, as one of the model reformers in Africa, is unlikely to face sanctions from donors, including the IMF. Fiscal reforms continue, for example the introduction of a 10% VAT in December 1998, and increases in electricity tariffs, which are linked to improvements in the over-strained power grid. The regional drought in 1998 crippled the country’s chief power supply facility, the Akosombo Dam built in 1968, which was reduced to supplying only 400MW of its 912MW capacity. Additional thermal capacity has been installed at Takoradi (660MW by 2001) and Tema (80MW), and there is a longer term plan to pipe natural gas from Nigeria. Good rain in recent years has restored the dam at its highest levels since 1993.
As capacity constraints are lifted with more power becoming available, however, real GDP growth was 4.6% in 1999, and remained strong in 2000, at around 5%. Inflation has increased from moderate levels in 1998-99 to around 30-40% currently. The relative stability of the cedi, which averaged C2370:$US1 in 1998, has declined in line with inflation differentials to be around C7000:$US1 recently.
There are currently over 25 Australian companies with ongoing operations (mainly mining related) in Ghana, and a resident Australian community totaling around 500. The success of their activities has had the effect of encouraging Australian companies to venture further afield to other parts of West Africa, using Accra as a base.
Figures are not available for Australian investment in Ghana but it is reliably estimated at $A1billion, primarily in gold mining, exploration and support operations. The following are the main Australian firms with operations in Ghana: Minproc Engineering (Perth), African Mining Services Ltd (Ausdrill-Eltin joint venture), Bayswater Contracting, Lycopodium Pty Ltd, Ranger Minerals Ltd, and Resolute Ltd. Australian companies mine 25% of the gold produced in Ghana and are heavily engaged in exploration and contracting to other mining companies, such as the giant Ashanti Goldfields Corporation.
In 1997/98, Australian exports to Ghana (industrial machinery, civil engineering equipment, heating/cooling equipment, chemicals etc) totalled A$62.9 million. Australian imports from Ghana (mainly cocoa and wood products) during the same period totalled A$ 6.1 million. As Ghana's economy develops, there are likely to be increasing opportunities for Australian exporters in areas such as food and beverages, environmental services, agricultural and textile manufacturing.
The Ghana Investment Promotion Centre (GIPC) governs almost all investments within the country except for the mining and petroleum industries. The latter are handled by the Ministry of Lands, Forestry & Mines, and particularly the Minerals Commission.
During the year 2000, the GIPC registered 180 projects in various sectors including manufacturing, service, tourism, building and construction, agriculture and general trading. These projects were estimated to cost US$132 million and to generate employment opportunities for some 9,700 Ghanaians, and 80% were located in the Accra region.
Between September 1994 and December 2000, a cumulative total of 1160 projects made up of 397 wholly foreign-owned (estimated at US$1.32 billion) and 763 foreign-Ghanaian joint ventures (estimated to cost US$0.28 billion) were registered. These investments were expected to generate a total employment of 63,800 Ghanaians and 4,040 non-Ghanaians mainly in the manufacturing (21,800), agriculture (10,600), building and construction (10,800) and services (13,500) sectors.
Great Britain remains the major source of GIPC-registered foreign investments into the country with 116 projects since 1994, followed by China and India with 93 each, then the USA (82), Germany (79), and Lebanon (63). Lower down the scale are Canada (23), South Africa (20) and Australia (18). Mining investment does not form part of these figures.
Taxation of companies is administered by the Commissioner of Internal Revenue, through Inspectors of Taxes at various locations throughout the country. The fiscal year, otherwise referred to as the year of assessment, is the calendar year ending 31 December. There is no double taxation agreement with Australia, but there is one with the UK, France, Sweden and Malaysia.
There are a number of investment incentives available to foreign companies wishing to invest in Ghana. Businesses involved in agriculture, manufacturing, construction and building industry, tourism and general services are entitled to incentives.
Companies are allowed to retain 35% of export proceeds in an external account to be used to pay incidental expenses of a company sold to authorised dealers. Capital allowance is granted to all companies setting up an establishment in Ghana depending on the type of asset. For example, the write-off of new or second-hand machinery and equipment, annual wear allowance and a depreciation allowance on the cost of buildings used in the manufacturing process.
There are investment guarantees in respect of the following:
· 100% transfer of profits, dividends, fees etc;
· automatic grant of immigrant quota (long term expatriate work/residence permits) depending on paid up capital;
· membership of Multilateral Investment Guarantee Agency (MIGA);
· bilateral investment promotion and protection agreements.
The rate of tax is:
· 8% on export income for companies in the non-traditional export sector (eg pineapples, cashew nuts);
· 25% for hotels;
· 35% for all other sectors;
· a further rebate of 25% for manufacturing companies located in regional capitals other than Accra-Tema and 50% for manufacturing companies located outside regional capitals.
· Real Estate : 5 years
· Agriculture : 5 - 10 years
· Rural Banking : 10 years
· Manufacturing based on local raw materials : 3 years
Other tax concessions
· Accelerated depreciation allowances at the rate of 50% per annum for 2 years for Plant Expenditure and 20% per annum for 5 years for Building Expenditure applicable to all sectors except banking, finance, commerce, insurance, mining and petroleum.
· Loss - carry - over of 5 years for all sectors except Insurance business which is unlimited. Fully deductible Capital Expenditure for Research and Development.
· Exemption from minimum chargeable income of 5% of Turnover during the first five years.
· Exemption from income tax payable on the provision of accommodation for employees on farms and building, timber, mining and construction sites.
· Tax rate on Dividends 10%
· Tax rate on interest 10%
· Tax on Royalties, management, technology transfer fee 15% (for non-Residents only)
Value Added tax (VAT) & Import Levies
· Tax rate 12.5% on local purchases, exempt for imports (credit system operates).
· 5% levy on all imports except certain plant, machinery and equipment items used in mining
· 1% levy on all exempted imports
· 0.5% levy on non-petroleum goods imported for commercial purposes
100% duty exemptions for plant machinery equipment and parts thereof.
Export free zones and export processing zones
In July 1995, the Ghanaian Parliament enacted the country's Free Zone Act (FZA) which created one of the world's most attractive packages of incentives for hassle-free business operation for exporting firms. These incentives serve to amplify business in what is already a centre for international business.
Highlights of Free Zone Act (FZA) are as follows.
· The FZA allows for production, manufacturing, and services, including financial services.
· Exemption from taxes of import into free zone area.
· Exemption from taxes on profits for 10 years.
· Up to 30% of the annual production can be sold in the national customs zone.
· A foreign investor may take hold of 100% of shares in Free Zone property.
· Income tax after 10 years shall not exceed 8%.
· Foreign and domestic investors shall have equal status.
· No nationalisation or expropriation within a free zone.
· Free Zone enterprises shall have ability to hold a foreign currency account.
· Contract negotiations and terminations determined by the free zone enterprise.
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